Whats up, it’s me…
Nonetheless no blue checkmark on X (however yeah, I’d love extra tweet characters!), nonetheless no Substack, nonetheless no paywall, nonetheless managing a diversified (household office-type) portfolio for the long-term, and nonetheless hoping to seek out & really maintain on to extra new high-quality multi-baggers alongside the best way.
So no messing, let’s simply dive straight into the numbers – my FY-2025 Benchmark Return remains to be the identical common of the 4 most important indices that finest symbolize my portfolio, and it delivered a wonderful +22.2% acquire:
Nicely, it lastly needed to occur…the S&P 500 was the loser of the bunch, trailing even the STOXX Euro 600, lagging the FTSE 100 by over 5%, and never even delivering half the ISEQ‘s spectacular 34%+ acquire! The Nasdaq carried out just a little higher, with a +20.4% acquire, however nonetheless didn’t catch the FTSE, or come anyplace near the ISEQ. This was very a lot a large-cap phenomenon, with the FTSE 250 up +9.0% & the AIM All-Share really up +6.5% (a minor miracle, regardless of UK FinTwit’s endlessly constructive annual returns!?), versus a +11.3% acquire for the Russell 2000. However the true motion was really occurring in creating markets, with the MSCI Rising Markets USD Index up an unbelievable +31%, whereas the MSCI Frontier Markets USD Index delivered an astonishing +47% acquire. Crypto alternated between bull & bear markets all yr, and regardless of a crypto-friendly White Home & even (grudgingly) a friendlier FCA, it didn’t ship with Bitcoin down (6.3)% & Ethereum down (11.0)%. [I’d argue the horrendous collapse of the BTC/digital asset treasury company bubble deserves far more blame here than people realise]. The greenback additionally declined considerably, with the DXY down (9.4)%, reflecting (11.8)% weak spot vs. the euro, a (7.1)% drop vs. sterling, albeit this was alleviated by a flat efficiency vs. the yen.
I do know a swallow doesn’t a summer season make, however my intestine tells me that 2025 end result would possibly lastly herald an prolonged interval of (ex-tech) US fairness underperformance to come back…and I’d search for additional underperformance in 2026 and/or 2027 as definitive affirmation, noting that historic US beneath/over-performance has tended to happen over decade/two decade-long cycles. [And if so, alas I suspect it will take years for the average US (or even UK) investor to actually respond & overcome their recency/home biases & maybe/finally redeploy their portfolio & embrace global diversification]. And whereas I proceed to contemplate this potential shift – and it instantly appears form of foolish as I write this – I additionally need to surprise if the mainstream media’s relentless narrative that the post-WWII world order’s breaking down & America’s slipping into some dystopian/fascist nightmare beneath Trump is genuinely starting to have an effect on investor/institutional sentiment & acquire traction in the true world!?
However that being stated, a 16%+ S&P acquire could lag the remainder of the world, but it surely’s clearly the very reverse of dystopian by way of historic returns! And screaming ‘greenback’s collapsing!’ headlines are meaningless too – zoom out on the DXY & you’ll instantly see the greenback’s simply been correcting its post-COVID inflation/charges rally & has principally gone nowhere for the final 5/10/40 years! Frankly, in most international locations, who’s in energy is in the end far much less essential than buyers give it credit score – my portfolio hasn’t modified an iota due to Trump (or Biden), but it surely has advanced over time to particularly restrict my US publicity to a (de facto world) guess on expertise, and to in any other case diversify my publicity globally & throughout different sectors/asset lessons. And so, regardless of my disclosed portfolio acquire (beneath), 2025 was a welcome yr by way of my general portfolio allocations – my high 5 funding themes being the expertise sector, rising/frontier markets (primarily Asia), the posh (& experiential) sector, Europe (world compounders & particular conditions) & different property – and by way of the potential highway forward.
So once more I say…diversify!
Now let’s transfer on – right here’s my precise Wexboy FY-2025 Portfolio Efficiency, by way of particular person winners & losers:
[Gains based on average stake size (NB: REC’s higher due to a +0.9% increase in mid-Jan, and TFG’s higher due to a +0.7% increase in late-July & its DRIP) & end-2025 vs. end-2024 share prices. All dividends & FX gains/losses are excluded.]
And ranked by dimension of particular person portfolio holdings:
And once more, merging the 2 collectively – by way of particular person portfolio return:
So yeah, again in black…however not precisely trigger for celebration, by way of my absolute (barely constructive) +0.5% acquire, not to mention my horrible (21.7)% under-performance vs. my benchmark return.
And once more, KR1’s (solely) guilty right here – when will I be taught!? After all, I ought to invite the haters to revel on this debacle…albeit, whereas persevering with to studiously ignore the +268% return I made, for instance, on KR1 in FY-2023 (fueling a 65%+ portfolio acquire for the yr). However once more, it’s nonetheless extremely early in crypto, and it’ll proceed to be horribly unstable, so I at all times advocate a long-term 3-5% crypto allocation (ideally, together with KR1) as completely enough in any portfolio – in reality, that’s really bigger than my authentic allocation – however since then I’ve clearly performed with home cash & a a lot larger allocation, and have once more suffered the draw back of that persevering with volatility in 2025. However, Alphabet’s not solely a a lot simpler/larger conviction guess, it’s additionally compounded into one other massive (& now my largest!) portfolio holding – broadly offsetting my KR1 losses & serving to me stumble into the black in 2025. However certain, it’s nonetheless irritating to understand that absent KR1, I might have really blown my benchmark out of the water (& enriched my internet price a LOT extra!) with a shocking +34% portfolio acquire!?!
However no crying within the on line casino: Let’s face it, anybody hoping for multi-baggers & superior long-term returns has to simply accept residing with larger dangers & setbacks alongside the best way…and also you’ll must dimension & diversify your portfolio as wanted (emotionally) to accumulate a extra (excessive) danger tolerance. Happily, as an ex-trader, I’ve at all times been in a position to idiot myself into believing portfolio positive factors/losses are nothing greater than numbers on an Excel spreadsheet (nope, I’m not lifeless inside, I’d sulk for per week if I misplaced a twenty IRL!). And large image, KR1’s nonetheless a multi-bagger for me, and was a (mega) multi-bagger for my spouse (yeah, I belief my spouse!) – and KR1/crypto nonetheless gives the identical uneven risk-reward right here, so it’s an (clearly re-sized!) guess that also belongs in my portfolio. And extra typically, I like to recommend limiting the dimensions of your preliminary holdings, averaging up (not down) if/when shopping for extra (as much as a tough % restrict, by way of entry value), and diversifying your portfolio as a lot doable however nonetheless preserve working your winners.
Now let’s proceed with an annual evaluation of my present (disclosed) holdings:
FY-2025 (24)% Loss. 12 months-Finish 0.6% Portfolio Holding.
That’s the fourth consecutive (& worst) yr of declines in Saga Furs’ inventory – albeit, considerably alleviated by a +9.5% dividend yield – which is tough to imagine, as FY-2025 outcomes have been in keeping with 4 yr averages throughout almost each metric. So let’s summarise: Public sale gross sales have been €324 million (10.0M pelts), down barely year-on-year however offset by the next 13.0% take-rate, leading to internet income of €42M. Working revenue was poor at €1.4M, however the major earnings driver was €3.1M of internet monetary earnings, for a €4.5M pre-tax revenue, €1.00 EPS & a proposed €0.72/share FY dividend. Which left Saga buying and selling on a 6.5 P/E & an 11.2% yield as of year-end. No surprise the inventory’s up +38% since, as buyers lastly begin realising some sector, market cap & geographic diversification may very well be a good suggestion!
That stated, nothing a lot has modified by way of fundamentals, or Saga’s poor capital allocation (administration owns NO shares). Common return on fairness was 3.5% over the past 4 years, so no actual shock Saga Furs trades on a 0.35 P/B right here, however what’s galling is the rising degree of (internet) money…a 0.6 P/C a number of is astonishing for a worthwhile enterprise paying an 8.0%+ dividend!? Frankly, I’m amazed all the brand new worth bro’s on X haven’t found it…however they’ll, ideally serving to ‘bid it as much as €12.00+ & even €17.00+ value ranges, a minimum of quickly’. However actual worth enhancement/realisation solely occurs right here if Saga Furs winds down (perhaps authorities/EU-mandated, however possible nonetheless price its present NAV/share), lastly receives a takeover provide (personal fairness gained’t chew, so maybe a Chinese language purchaser?), or the board will get faith re capital allocation (think about the share buyback impression over time, from income/surplus money, versus the precise dividend!?). A pleasant problem for a neighborhood activist investor, however the legacy (fur-breeders collective) tradition & shareholder base are inclined to argue in opposition to that situation.
In the meantime, the inventory’s nonetheless low cost on a sub-9 P/E & an 8%+ yield. And after a poor H1, it’s price highlighting H2-2025 EPS was €1.72, so taking into consideration latest H1s (€0.05 & €0.43 in FYs 2024/2023), a €1.77+ EPS run-rate right here is solely doable…regardless of the same old cautious/adverse administration outlook. That might recommend Saga Furs is definitely buying and selling on a 5 P/E right here…
ii) Donegal Funding Group ($DQ7A.IR)
FY-2025 +4.8% Acquire. 12 months-Finish 2.8% Portfolio Holding.
[NB: i) FY-2025 gain reflects a (lower) €17.40 mid-price as of end-25, vs. a higher official ISE close of €18.40 (which reflected a stale Nov-25 last traded price), and ii) year-end holding reflects a new (pre-yearend) 2.2% increase in my position, as I confirmed Jan-1st on X.]
Lastly, the yr of the deal…
However first, let’s kick off with Donegal Funding Group’s final return of capital, which returned €4.8M & retired one other 19.1% of Donegal’s o/s shares in early Feb-2025, through a €16.50/share redemption. [Plus a +1.4% dividend yield since]. With the market successfully valuing the seed potato enterprise at a 0.4 P/S a number of, this seemed like an good alternative to rebuild a a lot diminished holding (through successive redemptions & positive factors elsewhere in my portfolio) earlier than/after this newest redemption. [Unlike other portfolio changes, which I’d normally disclose same day/week, this change was necessarily reported long after the fact]. Happily, illiquidity restricted the size of my shopping for, whereas persistence & prudence ensured I solely purchased at/close to the bottom costs within the final 4 years (much like at present’s costs). And realizing a majority of my holding would get taken out at a market value (post-sale) additionally restricted my perceived danger right here.
Quick-forward to early-October: The seed potato enterprise is lastly being bought to Royal HZPC Group, a market chief in seed potatoes/breeding, for €16.5M money (€2.5M to be held in escrow for 2 years) & a contingent deferred consideration of as much as €4M depending on efficiency over the FYs Sep-2025 to Aug-2027. This was NOT the deal I used to be anticipating – at finest, a 0.6 P/S (vs. an 8% working margin) & a sub-9 P/E deal a number of – significantly vs. administration’s wonderful deal (value) historical past over time, promoting Donegal Creameries, An Grianan, Monaghan Mushrooms, Robert Smyth & Sons, and most lately Nomadic Dairy on a 1.8 P/S a number of, which (for related causes) appeared like a related deal a number of for the seed potato enterprise, ‘accounting for its mental property portfolio, its (absolutely expensed) R&D spending/pipeline & further value/income synergies within the arms of a bigger acquirer’ (Royal HZPC boasts €525M in income). Even worse, administration solely cited FY-24 financials that have been already 13-25 months old-fashioned, and anticipated approval of the sale at an end-October EGM, lengthy earlier than precise FY-25 outcomes could be launched by the corporate (mid-December)!?
An activist marketing campaign appeared apparent right here…besides the board owned a 6.6% stake (& was voting for the deal), I assumed Pageant Investments/Nick Furlong (with a 13.3% stake) have been consulted (with no objections), and I already suspected Pageant would possibly not have an urge for food for public/activist investments. Noting that, and the legacy shareholder base, a Sure vote appeared possible regardless…and so it proved on the EGM. A month & a half later, FY-2025 outcomes have been lastly launched & it was really one other nice yr, with seed potato income up +24% yoy & working revenue up +10%. So general, income jumped +38% within the final two FYs, whereas common FY-2024/25 internet revenue was up +30% vs. FY-23. What value would you placed on that form of momentum?
Besides that’s a pointless query, the deal was already accredited. And three months later, the deal is now accomplished, however introduced much more egregious information – upfront money is now €13.9M, escrow is €2.4M, and the board considers any cost of the contingent deferred consideration to be ‘extremely unlikely’. Which is astonishing, contemplating the deal was introduced over a month into the 2 yr contingency interval, was voted on two months after it begun, and now simply 5 months into the contingency interval the deferred consideration’s off the desk!? This drops the deal a number of to a 0.4 P/S – perversely, the market prediction a yr in the past – and a sub-7.5 P/E (vs. common FY-2024/25 PAT). And including this money to Donegal’s end-Aug €4.0M internet money, plus a €0.5M funding property sale, much less estimated central prices since, ought to quantity to ~€18M of internet money…however precise internet money of €16.4M (after deal charges!?) is one other disagreeable shock.
Nevertheless, €15 million money will now be returned to shareholders, through one other share redemption to be introduced shortly, in order anticipated this could redeem 75-80% of my holding at present market costs. After that, we’ll have a small €4M listed stub fairness which seems to be about break-even vs. €1.4M internet money, €2.4M escrow, a €1.0M mortgage to Uktal Seeds (a 20% fairness stake’s now a zero – as at all times with India, the problem is compensation & repatriation of this mortgage), a 51% stake in Kenyan sub. Kirinyaga Seeds (albeit, the authorized historical past right here isn’t promising), and the chance to monetise Donegal as a listed money shell inside 12 months (the media’s touting it as Eire’s first SPAC!?) might arguably be price one other €1/€2/even €5M to shareholders, however possible has a slim probability on the ISE. [Warning: Management will likely seek to delist asap IF a listed shell deal looks unlikely]. All in all, a moderately shabby/disappointing coda to this story, however Donegal’s nonetheless been an important multi-bagger funding & case historical past – thanks clearly to administration following via & delivering over time, but additionally because of what I prefer to suppose was an authentic/variant funding thesis on day one.
iii) VinaCapital Vietnam Alternative Fund ($VOF.L)
FY-2025 +0.0% Acquire. 12 months-Finish 4.7% Portfolio Holding.
One other mediocre yr for VinaCapital Vietnam shareholders…a +2.4% dividend yield doesn’t compensate for a (actually) flat share value. Forex was an enormous headwind, with the greenback gaining almost +3% vs. the dong, and in flip sterling gained +7.6% vs. the greenback – albeit, the NAV low cost narrowed marginally from 23% to 21%. However this ignores the elephant within the room…the appalling under-performance of VOF’s NAV vs. the VN Index, which really rallied +30% final yr. A lot of the positive factors got here from early-June on, after the index decisively broke the 1,300 resistance zone – which, frustratingly, I’d lengthy flagged as a key inflection level – then blew proper via 1,500+ all-time-highs at end-July, including momentum to hit 1,900+ in January, and taking a breather at present across the 1,800 ranges we noticed as of year-end.
This isn’t new for VOF – its portfolio has tended to lag a market rally, reflecting the combination of listed equities, OTC & pre-IPO shares, personal fairness investments, structured loans, immediately owned (actual property) property, and so on. in its portfolio over time. That stated, VOF’s clearly advanced over the past twenty years+, in keeping with the market, so its present portfolio (86% equities, 11% personal fairness) has advanced too…however almost 80% of the portfolio nonetheless originates from personal fairness, personal placement/PIPE & authorities privatisation investments VOF made over time, so its portfolio has develop into extra liquid/equity-focused, however remains to be fairly completely different vs. the index itself. [Whose rally was fueled by incredible gains in Vingroup & Gelex ecosystem stocks, which were mostly shunned by the VOF team]. Additionally, VOF’s long-respected supervisor Andy Ho handed away in Jun-2024 – final yr, I assumed a comparatively seamless transition, but it surely took VOF 9 months to nominate long-standing group member Khanh Vu as lead portfolio supervisor in Mar-25, adopted by substantial portfolio turnover/re-allocation (which did add alpha, VOF insists), so the jury’s out on this transition & the fund’s abysmal under-performance, as I’m certain your complete VinaCapital group are properly conscious.
This brings us again to a recurring investor debate over VOF vs. its friends – VietNam Holding ($VNH.L) really did even worse in 2025, whereas Vietnam Enterprise Investments ($VEIL.L) matched the index. One might arguably select any/all of them as a ‘winner’, relying on the interval(s) you cherry-pick – noting VOF’s the one dividend payer – but it surely’s VOF’s long-term efficiency & extra various/differentiated portfolio that initially attracted me, and granted me the arrogance that I might (& really would) maintain it as a long-term multi-bagger. This ‘standards’ is commonly forgotten by buyers – everybody needs to seek out/purchase compounders on the proper value, however all too not often has the abdomen & conviction to truly maintain them via thick & skinny – whereas my precedence is to focus in on shares that boast the form of stability sheet, (owner-operator) administration group, distinctive portfolio/enterprise, and so on. that can really permit me to sleep at evening & ignore short-term volatility/divergence, realizing my funding can & will proceed to compound over time.
So at this level, I’ve a ‘belief, however confirm’ angle – VOF tends to lag in a sizzling market, but additionally tends to catch up over time, through a sustained bull market and/or outperforming in a troublesome market – VinaCapital are beneath the hammer right here, they personal 3.0% of the fund, and VOF continues to aggressively purchase again shares (lowering o/s share rely by 10%+ in 2025!). And I’m nonetheless pound-the-table bullish on Vietnam – the new China, the place buyers are literally the first stakeholders!? – it has a younger/educated workforce & a rising middle-class, good buying and selling/political relationships with each China & the US (Trump’s tariffs don’t diminish its apparent wage/value benefit vs. the US & its Asian friends), it boasts 7%+ GDP development, the market’s nonetheless priced (as of year-end) on a 13 P/E vs. forecast 18% earnings development, FTSE Russell is planning to improve Vietnam to rising market standing in September, and (technically) I see a number of suppressed/untapped momentum & probably large upside nonetheless forward for the index.
iv) Tetragon Monetary Group ($TFG.AS)
FY-2025 +24% Acquire. 12 months-Finish 4.8% Portfolio Holding.
[NB: I increased my position last year by +0.7% from 4.2% (at the time) to a 4.9% holding, as I confirmed Jul-21st on X.]
That’s a fourth consecutive yr of positive factors for Tetragon Monetary – not forgetting a further +2.8% dividend yield (which it is best to DRIP) – hmmm, could also be time for the haters to lastly shut up!? [And for retail to stop moaning about KIIDs, put on their big boy pants, do some KYC & finally buy TFG via a full-service broker/trade!] We loved the identical three NAV growth-drivers final yr: First, we had a stumble – the continuing Equitix sale course of ended with out a deal – however fortuitously, this was shortly rectified with information of a non-control deal in mid-June, the place TFG would promote a 14.6% stake (from its 81.5% controlling stake) at a £1.3 billion enterprise worth (vs. £11.7B AUM). This was (once more!) welcome affirmation of the veracity & prudence of TFG’s asset administration valuations, and triggered a +35% mark-to-market acquire in its general Equitix stake (to $1.355B) & a +8.1% NAV/share acquire for June.
Second, additionally in June, the worth of Tetragon’s ~2.2% stake in Ripple took off, leaping over +45% to $350 million (per the personal market value), pushed by a $175/share Ripple tender provide. A follow-up tender provide at $250/share, a $0.5 billion Fortress-led funding spherical (on the identical $40 billion/$250 a share valuation), and the ever-escalating worth of Ripple’s underlying $XRP Treasury (which peaked at $135B+ in late-July), continued to drive TFG’s stake larger once more to $0.6B in Sep/Nov. And third, TFG’s pure resources-focused Hawke’s Level unit additionally struck gold, with its major holding in Ora Banda Mining ($OBM.AX) using a gold/metals rally from end-July & doubling the worth of its portfolio by year-end.
So little surprise I added extra Tetragon in July, at a ~56% NAV low cost, rising my holding by +0.7% from 4.2% (on the time) to 4.9%…and noticed new $19.25+ all-time-highs in Sep/Nov. However there’s an apparent motive I did NOT max. out my holding (but) – keep in mind, I impose a shopping for restrict as much as 7.5% of my portfolio, or probably 10% since TFG’s already a diversified funding firm/portfolio – the large inflection level right here for me is lastly seeing Griffith & Expensive significantly deal with enhancing & realising TFG’s NAV/share (through bigger tender gives, and/or a sale/wind-down), vs. sustaining AUM & milking an extremely profitable (& personally owned) administration contract. However we’ve seen NO new tender provide, or change in funding technique – proceeds from the Equitix sale & each Ripple tender gives have been utilized to TFG’s internet debt, which ended the yr at $(316) million, a mere 7.5% of complete property. However administration was snug with larger ranges of debt a lot of the yr, starting from just below 10% at end-24 to a 13.6% peak, as I’m certain most shareholders have been (& are!), so the chance to go away larger debt excellent & launch a highly-accretive $300-$400M tender provide at an enormous NAV low cost was squandered, and once more casts doubt on the final word value-realisation timeline right here. The one ‘silver lining’ is a reversal within the share value since to $15.40/share (reflecting value retracements in $XRP, Ripple & Ora Banda) & a widening within the NAV low cost, presenting an shopping for alternative (for each TFG & buyers!).
However general, the funding proposition’s a lot the identical: Administration’s delivered a +19.6% complete NAV/share return in 2025, a +15.4% return in 2024, and a remarkably constant +11% pa over the past 5/10/19 years – and no moaning about exorbitant charges, these returns are NET! – the place else on the planet can you purchase right into a diversified funding portfolio on a 63% (absolutely diluted) NAV low cost & earn returns like that, whereas awaiting an eventual sale/wind-down!?
FY-2025 (63)% Loss. 12 months-Finish 5.7% Portfolio Holding.
Alas, one other horrible yr for KR1…
After a short opening rally, crypto kicked off one other bear market into mid-April. That’s when promoters lastly unleashed a worldwide tsunami of digital asset treasury corporations – clearly impressed by Saylor’s pioneering Bitcoin treasury firm technique, albeit Technique ($MSTR) had already peaked six months earlier than & is down properly over (75)% since! Not surpisingly, crypto additionally took off (once more) at that time. What ensued is without doubt one of the quickest & craziest bubbles I’ve ever seen: Bitcoin/digital asset treasury share costs soared in a reflexive loop, with promoters capitalising on sentiment/larger costs by issuing extra & extra shares to gullible punters paying 5/10/20+ mNAVs, which raised corporations’ NAV/share (‘Bitcoin yield’ per the promoters, ‘infinite cash glitch’ per the suckers), which prompted even greedier sentiment & larger valuations/share costs, which…properly, you get the thought!
After all, that is nothing new – promoters have really been pulling this trick (buying and selling their overvalued scrip for laborious property) for tons of of years now. It’s Ponzinomics…a enterprise mannequin constructed on nothing, promising every part, and destined to break down as quickly because it runs out of contemporary money & buyers. On this occasion, it took simply two months to play out, with share costs peaking in late-June…with any underlying ‘worth creation’ in the end proving irrelevant for the typical investor who by no means bought in early sufficient, who paid a ridiculous value (even equal to $6 million+ for Bitcoin!), and who has (inevitably) misplaced a sickening (75)% to (99)% of their cash since.
However how is that this all related? Nicely, with investor curiosity/flows completely targeted on Bitcoin (& Ethereum), crypto ETFs & Bitcoin/digital asset treasury corporations, the anticipated rotation into #alts by no means actually occurred. And because the crypto rally faltered & entered a brand new bear market – albeit, $BTC did briefly/heroically counter-rally to a brand new $126K+ all-time-high in early-October – alts fell (a lot) more durable, as did KR1’s portfolio & NAV/share. It’s a reminder how early it nonetheless is for crypto, and extra particularly crypto-stocks…punters nonetheless need the reassurance of shopping for into the biggest crypto-stock (or ETF), ideally fronted by TV speaking heads like Saylor, Novo or Tom Lee, or nonetheless desperately need to imagine within the sleaziest promoters (& their scumbag rampers), the flimsiest of enterprise fashions, and/or probably the most ludicrous lottery ticket stonks. And KR1 is neither – they’ve constructed it into an institutional-grade crypto-stock, but it surely presently lacks the institutional-grade market cap & IR perform to draw the buyers it deserves. Therefore, it was bizarrely uncared for in 2025 – beginning & ending the yr on a 0.8 mNAV, however largely buying and selling in a 0.65-0.75 mNAV vary, whereas on the identical time BTCTC punters have been scrambling to pay 5/10/20+ mNAVs as an alternative – regardless of boasting a worthwhile staking operation (on a 95% NET margin), ZERO debt, dilution & taxes, an owner-operator group, and a best-in-class/long-term funding monitor report.
None of this, nevertheless, distracted the KR1 group from their long-term technique – please revisit my to-do checklist from earlier yr(s) – it’s been sluggish & regular (& generally painful) progress to succeed in the final two remaining/essential deliverables. First was an up-listing to the London Inventory Alternate (from Aquis) – we lastly bought affirmation this was going forward – alas, KR1 clearly needed to marshal all its time, vitality & assets, press pause on new seed spherical investments, and focus consideration solely on its staking operation, to lastly win over a beforehand intransigent FCA & get approval for its end-Nov up-listing. [Which seems to have perversely prompted a complete about-face, with the FCA approving Satsuma Technology’s re-listing & Smarter Web’s up-listing shortly thereafter, despite neither having a meaningful/credible operating business]. Now the up-listing’s out of the best way, this could clear the best way for complementary new seed, later-stage, and/or open market investments by KR1, which simply leaves the second essential deliverable…an expert in-house IR/PR perform. Which now seems to be able to kick off with a brand new Head of IR, a brand new Monetary Infrastructure Technique introduced, and the corporate’s first Investor Meet presentation this Friday.
This ‘new’ technique reiterates KR1’s dedication to #DeFi – the nexus between #TradFi’s world wealth/funds/cash provide & crypto itself, and the biggest blockchain TAM alternative on the market – based mostly on the dual pillars of $ETH (already its high holding) & $BTC (a brand new holding, to be redeployed from earnings & non-core holdings), present & future #DeFi investments, plus present & new staking/validator alternatives. And as famous within the latest LSE prospectus, that is backed up with a brand new inserting programme – to boost new funds, onboard new (institutional) shareholders, add new staking alternatives, scale back the expense ratio, and improve the stability sheet/market cap – clearly that is depending on a profitable & sustainable IR/PR perform, and a step-change in KR1’s valuation a number of, as beleaguered shareholders clearly WON’T abdomen any sub-1.0 mNAV dilution. That being stated, the group is ‘clearly differentiating KR1 from the general public digital asset treasury firm mannequin’, which is to be applauded. Attracting the proper of sensible/long-term oriented buyers is simply as a lot about promoting what KR1 is NOT, as it’s about promoting what it really is at present…nonetheless a uniquely diversified crypto/DeFi/enterprise capital funding firm & staking operation.
So dimension your crypto allocation appropriately – as at all times, I like to recommend a long-term 3-5% crypto allocation in your portfolio (now in keeping with my very own allocation at present, ouch!), ideally through KR1, or KR1 & a $BTC ETF – sooner or later, this newest Bitcoin-led bear market will inevitably blow over, and hopefully we’ll quickly see:
i) KR1’s present staking earnings run-rate (vs. a median £8.8M+ pa within the final three years) begins rising once more with the crypto market & (ideally) with new capital/staking alternatives,
ii) buyers (& even eviscerated punters!) with a new-found intuition for & aversion to dodgy promoters, ridiculous comp. schemes, crappy enterprise fashions & hopeless/non-existent monitor data, and
iii) a new-found respect for KR1 (given a correct IR/PR perform & an LSE itemizing), and a (locked-in) owner-operator group that eats its personal cooking (after shopping for a ~25% stake), runs a worthwhile staking operation, and truly boasts the most effective +44% pa/3,075%+ funding monitor report on the planet over the previous decade!
And all nonetheless on sale for a 0.8 mNAV…
FY-2025 +5.6% Acquire. 12 months-Finish 6.4% Portfolio Holding.
[NB: I increased my position early last year by +0.9% from 4.5% (at the time) to a 5.4% holding, as I confirmed 18-Jan-25 on X.]
It was the same old radio silence (or else the same old moaning!) from REC shareholders, however after two unhealthy years a +5.6% share value acquire & a median +8.5% dividend yield seems to be fairly good to me. Whereas the broader UK-listed asset administration sector’s been in a bear marketplace for years now – on account of relentless outflows for each energetic managers & UK fairness methods – Report retains attracting inflows/win new mandates & retains hitting new AUM all-time-highs. That is just about the one sector metric buyers care about, however perversely REC hasn’t been rewarded for it…arguably as a result of it enjoys the posh of specializing in/investing for development, and doesn’t ‘handle’ its earnings trajectory very properly! As I’ve highlighted earlier than, buyers could be thrilled with an organization compounding EPS +16% pa over the past 4 years, however NOT one which grew EPS +46% pa for the primary two years (FY-2021/23) & then let EPS slip (8)% pa for the final two years (FY-2023/25). However successfully each are Report…
Regardless, in FY-2026, Report’s continued to speculate & pursue its transition from foreign money administration to a extra diversified (different) asset supervisor, offering a variety of companies to institutional buyers. It added a brand new CIO (Andreas Danzer), and tapped NED Dr. Othman Boukrami to hitch the manager group of its Report Forex Administration sub…he had an extended & profitable profession on the Forex Alternate Fund, an excellent indicator REC needs to continue to grow its rising/frontier markets AUM, each in foreign money administration & fastened earnings/personal credit score. [It will lose CFO Richard Heading next month, but shouldn’t face any difficulty replacing him…let’s not forget, REC’s successfully navigated the retirement of its founder Chairman & its prior CEO, bringing on a whole new generation of management in recent years]. REC continues to work on planning, elevating funds & launching new (larger charge) different asset funds – deploying the primary €100 million from their €1.1 billion Infrastructure Fairness Fund, transferring ahead with plans to launch a $1B+ Sharia-compliant commerce finance fund, and agreeing (non-binding) phrases with Kore Potash for a $2.2B undertaking funding facility. And its AUM momentum continues unabated – as of its latest Q3 buying and selling replace, complete AUM was up 15%+ yoy to a brand new $116 billion all-time-high, the brand new/fast-growing Options for Asset Managers line of enterprise was up +36% yoy to $17.4B, whereas high-fee FX Alpha responded to rising FX volatility with a +58% qoq leap to $2.7B. Efficiency charges (earned through hedging tenor administration/alternatives, not FX volatility) have compressed over the past couple of years, however notably £1.6M in efficiency charges was earned in Q3, serving to bridge the hole vs. FY-25.
Regardless of that, continued funding & a change within the underlying (charge/AUM) mixture of foreign money hedging/administration AUM means it’s one other ‘transition’ yr for Report, with FY-26 EPS consensus down once more at 4.0p – in all probability about proper, taking a look at H1/LTM numbers, and noting the precise timing/launch of recent funds/initiatives may be very related/vital right here. That places REC on 14 P/E & 2.5 EV/Income multiples right here (vs. a 25%+ FY working margin & a possible 60%+ incremental working margin), which could appear cheap…however I believe many potential/present buyers don’t absolutely perceive REC’s underlying (sticky/recurring income) enterprise – or critically, the ZERO speculative, market & counterparty danger it really takes – or absolutely recognize the precise uneven risk-reward right here:
i) underlying regular state earnings/working margin are clearly a lot larger, however administration’s intentionally selecting to re-invest to draw/improve AUM & in the end larger income, margins & profitability,
ii) at present’s 8.2% dividend yield is a compelling return in the meantime, and well-supported by underlying EPS & ~6p a share/£11 million+ in internet money (& a further £4M+ in investments),
iii) ALL of Report’s (considerably comparable) UK peer corporations have been acquired, or bid for, within the final yr/two – notably, Alpha Group (with a far much less sticky & way more transactional FX enterprise/shopper base) was acquired by Corpay on 20/50 P/E & 7/12 EV/Income deal multiples (relying on the way you outline its monetary metrics!) – to not point out REC’s retired founder & CEO nonetheless personal a (probably on the market?) ~33% combination stake within the enterprise,
iv) assuming this funding/AUM development does repay, the corporate’s clearly able to incomes far larger common & probably 60%+ incremental working margins, vs. its present 25%+ FY working margin…so sure, I anticipate REC can & will attain/surpass the £60 million income & 40% working margin targets (vs. £40M income & a sub-£100M EV at present) initially set by ex-CEO Leslie Hill.
FY-2025 +65% Acquire. 12 months-Finish 21.1% Portfolio Holding.
Once more, I’ve to marvel at what an absolute juggernaut Alphabet’s been over time, and clearly nonetheless is at present…Google was solely based in 1998, its annual income handed $1 billion in 2002, it solely went public in 2004, its annual income handed $100B in 2017, and final yr its quarterly income really handed $100B, whereas its annual income surpassed $400B!
However regardless of that income/development trajectory, we’ve in some way nonetheless skilled three separate bear markets within the final 4 years!? The primary was precipitated by a basic bear market in 2022, with the astonishing launch of ChatGPT in Nov-22 coinciding with a (45)% decline…in reality, $GOOGL really bottomed out earlier than the launch, however then spent an uncomfortable three months with its inventory (& Search enterprise) apparently heading straight for zero (a reminder blue checkmark FinTwit’s at all times the final word contra!). The second was in Jul/Sep-24, a near-(25)% decline, prompted by anti-trust & capex spending issues…the latter triggered by a $13.2B Q2 spend, which appears moderately quaint now, in mild of Alphabet’s present 2026 capex forecast! The third got here in Feb/Apr-25 – the DeepSeek second – however once more, a near-(33)% decline proved a mere blip within the highway for the share value, and for Alphabet’s AI spending/domination plans.
All of which is a reminder to proceed anticipating vital $GOOGL reversals alongside the best way…which might show difficult when a multi-bagger compounds right into a 21%+ portfolio holding!? However face it, studying to dwell with that danger is the ONLY path to a real (mega) multi-bagger – which is why all nice/long-term investing is in the end about EQ, not IQ – and I’ve at all times considered Alphabet as THE straightforward/apparent guess on a novel & existential AI Revolution alternative, and a crucial ‘hedge’ for the remainder of my portfolio & my household’s prospects (so yeah, I nonetheless sleep soundly at evening with my $GOOGL holding). To not point out, YouTube (20 billion movies & 20 million extra uploaded every day!) is already the biggest US TV streamer by far, and can inevitably emerge as one other trillion-dollar+ AI alternative/guess, each for creators…and by way of rising leisure time for society!?
This was initially premised on Google already being the most important & finest AI firm on the earth from day one…we take Search a lot with no consideration at present, it’s virtually unattainable to understand the sheer magic of getting the world’s info organised & instantly at our disposal, not least by way of quantifying the whole financial worth of the time-savings, data & productiveness it’s delivered to this point for world GDP & society. However at present, we are able to recognize Alphabet’s full-stack AI platform technique, delivering enterprise IT infrastructure, AI, knowledge analytics & cyber-security through Google Cloud, whereas additionally delivering AI through a number of two billion+ consumer merchandise/platforms to customers globally, ideally through Android/Pixel smartphones. All clearly supported by a (visionary) acquisition technique (I’m nonetheless satisfied DeepMind is/will show to be probably the most priceless acquisition ever), together with the Wiz & Intersect acquisitions & a number of knowledge centre/energy off-take agreements within the final yr. After all, Waymo’s one other AI platform in the true world – with 20 million fully-autonomous rides already clocked up – Alphabet’s simply closed/funded a majority of a brand new $16 billion spherical, at a $126B valuation.
And who might resist betting on that development trajectory – Alphabet’s been accelerating each quarter over the past yr, with complete income rising at +18% yoy in This fall versus +12% in Q1, working margins regular round 32%, and EPS rising +34% for the yr. Notably, Search use has really been enhanced by AI Overviews (over 1.5 billion customers/month) & AI Mode – as I highlighted earlier than, monetisation at all times was/is proscribed to particular high-intent search, like journey/buying/and so on, which nonetheless lends itself to being monetised in Search, and/or in the end in agentic/subscription AI – with income development rising to +17% in This fall vs. +10% in Q1. As for Google Cloud, income development accelerated to +48% in This fall, reaching what’s now an immensely worthwhile $70 billion+ pa run-rate, with backlog rising even sooner to hit $240B. YouTube Advert income development averaged +12%, whereas Subs averaged +19%, with YouTube Adverts & Subs hitting $60B+ income final yr, whereas general Google now boasts 325M+ paid subscribers. After all, AI utilization/sign-up development’s even sooner – with Alphabet now ‘delivery with pace’, rolling out Gemini 2.5, Veo3, Genie3, Nano Banana & Gemini 3 – with Gemini leaping from 450 million MAUs to 750M MAUs in simply the final two quarters, and with tokens processed rising 20x yoy, Alphabet needed to change from a month-to-month to a per minute metric (now at 10B+ tokens/minute)! And administration’s leaning laborious into this development – emphasising provide is the constraint, not demand – with 2025 capex spend hitting $91B (vs. an authentic $75B estimate, and $32B capex simply two years in the past), and prompting a brand new $175B-$185B estimate for 2026. Which spooked buyers, who inevitably & perversely at all times need to deal with/wrestle to discover a ‘adverse’ in blockbuster quarterly outcomes, with $GOOGL now down marginally year-to-date, vs. a $349/share all-time-high simply over per week in the past.
However as a shareholder, isn’t THIS precisely the explanation why you’re betting on Alphabet & its administration, particularly when this highlights & confirms an apparent conviction that they’re now dominating & profitable within the AI race…
…and on the highway to AGI!?
Better of luck on the market in 2026.